The Labor Department said that weekly applications for unemployment benefits fell 5,000 to a seasonally adjusted 366,000.

The four-week average, a less volatile measure, dropped to 350,500, the lowest in nearly five years. The average is as low as it is, however, partly due to seasonal factors, which reduced applications sharply last month.

Retailers are releasing sales figures for January and, while early, there are some signs that people are now more willing to shop.

With about 70 percent of economic activity driven by the consumer, economists have been paying close attention to the performance of retailers like Target.

Limited Brands, which owns Victoria's Secret and Bath & Body Works, said January revenue at stores open at least a year rose 9 percent, also topping estimates. Urban Outfitters also beat projections Thursday.

Still, Target Chairman and CEO Gregg Steinhafel raised the issue of the recent payroll tax increase that is taking a bigger chunk out of customers' paychecks, and he said that people are still shopping cautiously.

Possibly supporting Steinhafel's take on the mind of the consumer, the Federal Reserve will release its consumer borrowing report for December later in the day.

And while economists expect to see an increase of $14.4 billion, mostly in student and auto loans, Americans still appear unwilling to take on much credit card debt.